Private Line and Wavelength Services, 2013-2017

Increasing demand for wireless backhaul and
converged solutions using VoIP and MPLS are driving the demand for local
private lines. The market for high speed point to point circuits is
expected to remain moderately positive over the next few years, even as
Ethernet takes an increasing share of the point-to-point market. This
study will also provide an update on the status of new copper
technologies and their deployment vis-à-vis the more traditional fiber
private line solutions.

Does the demand for ever-increasing amounts of bandwidth translate into
increasing revenue for private lines? Will the emergence of nationwide
4G wireless solutions alter the competitive landscape? This report
explores the question of how and when the new 4G infrastructures will
create a threat to traditional landline private lines.

A private line is a dedicated non-switched circuit or channel that is
leased for a specified period. This channel provides a private and
direct connection between at least two sites. Private Line & Wavelength
Services, 2012-2017 details revenue and circuit counts by carrier type,
and defines the split between wholesale and retail sales of T-carrier
(T1, T3) and OC-N circuits (OC-3, OC-12, OC-48, OC 192, OC-768), gigabit
Ethernet, and wavelength services. Insight’s annual study illustrates
how carriers and their customers continue to move to higher capacity
circuits in order to reap the benefits of lower cost-per-bit transport.

The private line market has had a great run, but our
most recent analysis suggests that continued growth may finally be nearing
its end.

Year after year technical gurus predicted the death of
this market. New technologies had the potential to displace time division
multiplexing (TDM) as the dominant protocol for data transport, the bedrock
on which private lines had been built. Indeed, IP/Ethernet (Internet
protocol) services were introduced, adopted, and flourished. Yet private
lines continued to grow; sometimes at a rapid clip. And though growth was
disrupted by the telecom bust of the early 2000’s, private lines long term
trajectory was ever upward.

New applications were developed for businesses and
consumers that generated more data traffic. New types of devices were
invented to run these applications. Each device needed a network
connection. The plethora of applications and devices created huge demands
for bandwidth. Some of this data was transported over IP networks, but much
of it wound up on private lines. This insatiable demand for data has kept
the private line market growing since its inception.

It now appears, however, that the private line
market is entering the mature phase. Mature markets can be very
profitable. Mature markets can remain viable for years or even decades.
But mature markets do not exhibit growth.

This transition has been in the making for years. IP
technology was introduced over twenty years ago and initially it drove the
demand for private lines. But now it has reached the point where it is
starting to have a negative impact on private lines. In addition, the
nature of IT .............